Share the article
twitter-iconcopy-link-iconprint-icon
share-icon
AfricaApril 3 2005

BALEDZI GAOLATHE, Minister of Finance and Development Planning, Botswana

Baledzi Gaolathe remains committed to privatisation and has the state telephone firm and banks in his sights.
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

Running one of Africa’s most successful economies, fired by diamond wealth, should allow Botswana’s minister of finance and development planning, Baledzi Gaolathe, to sleep comfortably at night. But growing strains on the economy are being compounded by one of the world’s highest HIV/Aids rates; a weak dollar that has curbed diamond earnings; and setbacks in efforts to privatise state assets and attract non-mining foreign investment.

Botswana posted an unexpected budget deficit of 1.43bn pula in its last financial year – equivalent to 3% of GDP – as the dollar value of its diamond exports fell in line with the weak greenback, which sparked a sustained pula appreciation despite an official currency devaluation by the Gaborone government.

Though one deficit is not likely to change rating agency views of Botswana – it has the highest sovereign credit rating in Africa and the continent’s best growth record since independence from Britain in 1966 – a sustained budget deficit could be a dark cloud on the horizon.

So far Mr Gaolathe is not slamming on the spending brakes, despite an unpopular freeze in civil servants salaries: “While such an outcome [a deficit] is highly undesirable, it would have been disruptive to drastically curtail government’s expenditure in line with the revenue shortfall as most of the programmes were already ongoing,” he told parliament in February.

A key priority for Mr Gaolathe is to reshape its relationship with diamond giant De Beers to operate the country’s prolific mines for the next 25 years, especially the creation of a new joint venture firm to sort and market Botswana’s diamonds.

The IMF has already warned that diamond output is reaching a plateau, a concern as the diamond sector accounts for about one-third of GDP and 70% of export earnings. Long-standing plans to privatise the state airline remain plagued by delays with the latest potential strategic partner deciding to pull out. However, Mr Gaolathe remains committed to privatisation and has the state’s telephone company and banks in his sights.

Was this article helpful?

Thank you for your feedback!

Read more about:  Africa , Botswana